UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION

a corporation.

COMPLAINT COUNSEL'S MOTION TO EXCLUDE EXHIBIT RX 3118-3130 EXPEDITED RULING mQUESTED

Complaint Counsel respectfully moves pursuant to FTC Rule of Practice 3.32 to

withdraw and exclude from evidence Respondent's exhibit RX 3 1 18-3 130. For the reasons set

forth below and in the accompanying memorandum, this motion should be granted.

The Parties' First Amended Joint Stipulation Regarding Admitted Exhibits ("Joint

Stipulation"), entered into evidence by this Court on May 5,2004, plainly states that expert

reports and exhibits, including specifically RX 3 1 18-3 130 (the Maness expert witness report),

"are marked and submitted for identification purposes only."

Despite the Joint Stipulation, counsel for Respondent North Texas Speciality Physicians

("NTSP") moved for the admission of numerous exhibits by EX number, including,

unbeknownst to Complaint Counsel, the Maness report. A few minutes earlier Respondent's

counsel falsely had assured Complaint Counsel that the exhibits to be moved into evidence were

on Respondent's exhibit list and that Complaint Counsel had made no objection. In moving

those exhibits into evidence, Respondent's counsel assured this Court that Complaint Counsel

had no objection. Complaint Counsel, based expressly on opposing counsel's representation,

which Complaint Counsel stated for the record, raised no objection and the Court admitted the

documents. Respondent's counsel more than failed to clearly and conspicuously indicate to

Complaint Counsel and this Court that it was seeking to admit into evidence an exhibit the

inadmissibility of which already governed by the Joint Stipulation; it affirmatively suggested that

no objection to admission of any of the offered documents previously had been lodged. Based on

these facts, RX 3 1 18-3 130 should be withdrawn and excluded from evidence by this Court and

JX 3, which was unknowingly partially abrogated, reinstated in its entirety.

Complaint Counsel respectfully request an expedited ruling on this motion. Respondent

at times relies on RX3 1 18-3 130, the Maness report, in its proposed findings of fact. Complaint

Counsel must reply, pursuant to the Court's Order on Post-Trial Briefs, by June 30,2004, and the

content of that reply may vary depending on whether or not this motion is granted. Complaint

Counsel has met and conferred with Respondent's Counsel but has been unable to resolve this

dispute.

For these reasons, and those set forth in the accompanying memorandum, Complaint

Counsel respectfully request that your Honor enter an order withdrawing and excluding exhibit

RX3 1 19-3 130 from evidence and reinstating the Joint Stipulation in its entirety.

Respectfully submitted,

Theodore ~ a i g Jonathan Platt Alan Loughnan Elvia P. Gastelo

Attorneys for Complaint Counsel Federal Trade Commission Northeast Region One Bowling Green, Suite 3 18 New York, NY 10004 (212) 607-2829 (2 1 2) 607-2822 (facsimile)

Dated: June 30,2004

UNITED STATES OF AMEIUCA BEFORE FEDERAL TRADE COMMISSION

In the Matter of I NORTH TEXAS SPECIALTY PHYSICIANS,

a corporation.

DOCKET NO. 9312

COMPLAINT COUNSEL'S MEMORANDUM IN SUPPORT OF ITS MOTION TO EXCLUDE EXHIBIT RX 3118-3130

For the reasons stated herein, Complaint Counsel respectfully moves for an order of the

Court ruling that Respondent North Texas Specialty Physician's ("NTSP") expert report RX

3 1 1 8-3 130 should be excluded &om evidence.

1. The Parties' First Amended First Joint Stipulation Governs the Admissibility of Expert Reports

On June 16,2004, Complaint Counsel discovered while reviewing the proposed findings

of facts submitted by NTSP Counsel, that expert report RX 3 1 18-3 130 had been admitted into

evidence by this Court at the request of NTSP Counsel during the proceedings on May 6,2004.

Complaint Counsel was surprised to learn that this exhibit had been offered into evidence on

May 6 because the parties had only days earlier entered into Parties' First Amended Joint

Stipulation Regarding Admitted Exhibits (JX0003) ("Joint Stipulation") which was admitted into

evidence at trial on May 5,2004. (A copy of the Joint Stipulation is annexed as Exhibit A.)

Pursuant to the Joint Stipulation "[elxpert reports and exhibits are marked and submitted for

identification purposes only." Based on this Joint Stipulation, Complaint Counsel reasonably

believed that no expert reports would be offered into evidence by either party at trial except for

identification purposes.

11. The Admission of Expert Report RX 3118-3130 into Evidence at Trial Was Procured through NTSP's Counsel False Representation and Should be Excluded from Evidence

With the testimony of expert witness Dr. Robert Maness scheduled for the morning of

May 6,2004, NTSP Counsel Nicole Rittenhouse sent an e-mail to Complaint Counsel at 7:20

p.m. on May 5 , 2004. The e-mail, a copy of which is annexed as Exhibit I3, referred to 37 items

identified only by exhibit numbers, that NTSP Counsel represented were on their exhibit list but

were not timely objected to by Complaint Counsel. Moreover, the following morning, on May 6,

2004, a few minutes before moving these exhibits into evidence, Respondent's counsel falsely

had reassured Complaint Counsel that the exhibits to be offered into evidence were on

Respondent's exhibit list and that Complaint Counsel had made no objection. Given these

representations, Complaint Counsel took no further action when expert report RX 3 1 18-3 130

was offered into to evidence, because we had no reason to believe that the proposed exhibit list

contained any exhibits expressly governed by the Joint Stipulation which had been signed days

earlier and which had been admitted into evidence the prior day.

In fact, NTSP Counsel's representation in their e-mail and at trial that there was no

objection from complaint Counsel on the admission of any of the exhibits was simply false.

Complaint Counsel had numerous times previously made known that we objected to admission

of the expert reports into evidence--all of them being palpable hearsay--culminating in the Joint

Stipulation. Certainly, NTSP Counsel's e-mail of the May 5th or their reassurance prior to the

proceedings on the May 6" did not even begin to suggest that they were about to seek to abrogate

a joint stipulation of exclusion (other that for identification) already accepted by this Court earlier

in the day.'

The May 6th trial record makes clear the basis of Complaint Counsel's understanding.

NTSP Counsel William Katz offered numerous exhibits, again by exhibit number, and expressly

represented to the Court that complaint counsel had no objection. Mr Katz stated:

I just wanted to make it clear for the record, Your Honor, in preparation for Dr.

Maness' testimony, there's some exhibits that had not been admitted into

evidence. We provided a copy to Complaint counsel. They have had a chance to

review them. They have no objection to the list of exhibits I'm going to list off

here . . .[m]y understanding is there's no objection fiom Complaint counsel . . . .

(a copy of this portion of the trial transcript is annexed as Exhibit C)

In response Complaint Counsel replied that:

[rlespondent has represented to us that these documents were contained on their

exhibit list and that we did not make any objection. I've not verified that, I see no

need. Based on that understanding, we have no objection.

Having received no reply to the prior evening's email, NTSP Counsel nevertheless made

an unwarranted assumption that both parties intended to abrogate the Joint Stipulation's

treatment of RX 3 1 18-3 130 (the Maness expert report) by its simple inclusion, without more,

1 NTSP Counsel queries how Complaint Counsel could "miss" exhibit RX 3 11 8-3 130 since it is the first document on the May 5,2004 e-mail list. The placement of the document on the list is irrelevant absent a clear and conspicuous disclosure that the document was an expert report or subject to the expert report evidence limitations of the Joint Stipulation. If NTSP Counsel was trying to signal a change in the agreed evidentiary treatment of RX 3 1 18-3 130 by listing the document first, they chose a grossly ineffective method to do so.

among numerous other exhibits. Moreover, when Complaint Counsel indicated to this Court that

it had not verified whether NTSP Counsel's assertion was accurate and was relying on their

representation that there were no objections, NTSP Counsel again failed to respond that their

"conclusion" was based on the prior night's e-mail. Complaint Counsel did not object to the

admission of RX 3 11 8-3 130 based solely on NTSP Counsel's false affirmation to this Court that

Complaint Counsel had not objected to the admission of any of the proffered exhibits. In fact,

Complaint Counsel has clearly and consistently maintained the position set forth in the Joint

Stipulation that expert reports, including RX 3 1 18-3 130, were to be admitted for identification

purposes only. NTSP's Counsel more than failed to clearly and conspicuously indicate to

Complaint Counsel and this Court that it was seeking to admit into evidence an exhibit the

inadmissibility of which already governed by the Joint Stipulation; it affirmatively suggested that

no objection to admission of any of the offered documents previously had been lodged.

Complaint Counsel, and its cause of action, have been unfairly prejudiced by these

events. Had we not been misled as to the nature of the documents being offered into evidence we

surely would have objected to admission of the Maness report, as subject to the Joint Stipulation

and as rank hearsay. If notwithstanding that, your Honor had admitted the report, Complaint

Counsel would have examined Maness on the stand as to the contents of the report as well as to

his direct testimony. Having not known that the report, despite the Joint Stipulation, was among

the documents admitted, we could not do so. We hasten to add that Complaint Counsel has

carefully adhered to the Joint Stipulation, and that the Maness report, for no good reason, is the

sole expert report offered or received into evidence. Based on these facts, RX 3 1 18-3 130 should

be withdrawn and excluded from evidence by this Court and the Joint Stipulation (JX 3), which

was unknowingly partially abrogated, reinstated in its entirety.

4

111. Conclusion

For the reasons stated above, Complaint Counsel respectfully requests that the

Administrative Law Judge enter an order excluding from evidence expert report RX 3 1 18-3 130.

Respectfully submitted,

Michael J. B1 Theodore Zang Jonathan Platt Alan Loughnan Elvia P. Gastelo

Attorneys for Complaint Counsel Federal Trade Commission Northeast Region One Bowling Green, Suite 3 18 New York, NY 10004 (2 12) 607-2829 (2 12) 607-2822 (facsimile)

Dated: June 30,2004

CERTIFICATE OF SERVICE

I, Sarah Croake, hereby certify that on June 30,2004, I caused a copy of the foregoing document to be served upon the following persons:

Gregory Wufhan, Esq. Thompson & Knight, LLP 1700 Pacific Avenue, Suite 3300 Dallas, TX 75201-4693 Gregory.Huffman@tklaw .com

Hon. D. Michael Chappell Administrative Law Judge Federal Trade Commission Room 13- 1 04 600 Pennsylvania Avenue NW Washington, D.C. 20580

Office of the Secretary Federal Trade Commission Room H- 1 5 9 600 Pennsylvania Avenue NW Washington, D.C. 20580

Sarah Croake Honors Paralegal

Exhibit A

. - , . , 1 . D a k e t N ~ . 9 3 1 ' 2 . . ; . . . . NORTH TEXAS S P E C ~ T Y ' P ~ S I C L A N S , . n

. . A CORPORATION.

. ,

P&TIES~.FJR.ST AMENDED F ~ S T JOINT S ~ U L A T I O N REGARDING A . D M I ~ : E ~ ~ ~ S .

. . Complaint Counsel apd ~ e s ~ m d e n t NOT* ~ e v a s Speiialty ~h~kicians (''NTSF!'') (jointly, . . . . .

"parties"), hereby 'stipulate and agree tbat the dbcuments bn the kxMii.listi attached as Exhibit . . . .

A and Exhibit: B are ?&red. and admitted. The parties iesgnre the right to iffer the. leserved . . . .

. . . . . . . . . . . . . . . . exhibits . . at a'laxer b e i . . . . . . . . . . . . . . . . . - . . . . .

'

This mended joint stipulation& beidg filed becausg RX 1331, an exhibit that was . .

objected.to, w& inadvertently included on Respondent's Admimed Exhibit List, attached .as .

Exhibit B to the . . original joint stipulation. These . . . . . . . . exhibit lists are othe&e.identic.al to hose . , '

. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... ................ - i- ..... ... - . --- ...... ..- .....,... - -- -....-.. "..-1.--.-- .... - - ...... ..A .- ....... .- -." .---. ^ .--- - ^ .--. -.-..-.-.

submitted to the court i s rX-2 in rhe Parties' ~ G s t ~ b i n i ~ t i~u la t ion . . ~ e ~ a r d i p g ~ d x n i t ~ e d Exhibits. . . . . . . . . . . . . . . . . . . . f i :

The parties agree that all doiuments markid k t h an as.terisk (*) arr admitted.based on . . . . . .

the . repreie&atiog. . h i t a.&itness on either party'sfinnl . . . witness . list will be able io e&&lish the . : . . . . . . . . . . . . . . . . - . . . . . . . . . . . -

do&mentsl ~dmi&ibility. If the *on-offering park believe; G t a witness,has not established a . . . , . .

documents qdnlissibility, that parry may object to thed&u&enr's admissibility.. If the . . . . . . . . . . . . . . - -

~dnlidstrative Law Judge sustains the n o n - o f f i g party's objection, the offe&igparty agr&i to : . '

. ' . .

withdraw the dQCument froq'the record in this proceeding. The offeriy party retains its .right, to , . . . . . . . . . . . .

. . , .. make, an. offer of proof regarding any doiunxnts.

. . . .

Experr reports abd e.uhibits are marked and submitted for identification purposes only.

' Thed: exJxibip are CX 1150 - 1158 and RX 3 118 - 3 130 and 3253 - 3255. . .

. . . . . . . . . .

RespectkUy submitted, , . . .. . .

. . . .

, . ? Gregory ./K S; C. ~ ~ G f E g l m n ' . . : +. ..

* . .

Midiad J. Bloom ,

.Theodore Z i g , Jr. ' . .

Attorney for Coaplaint Counsel ' . .

' Federal Trade CoTnmiSsion - Northeast Region One .Bowling Green, Suite 3 18,. . ' . . '

. . . New York, 'NY 10004 . . 212.607.2529 ' . . . . . . . . _ '. . . . . . .

2.12.601.2822 - Fax . . :. . . . '

Attorney for North Texas Specialty .

. . P hysiciam. . THOMPSON &KNIGHT LLP ' 1700. Pacific Avenue, Suite 3300 . . Dallas TX 7520124693. . .

2 lPr.969.1700 2 14.969.1751a Fax . .

. . ......-..- -....-..___ . . . " .--.I-.I -__ . . . .

. . . . . SO ORDERED: . . . .

Exhibit B

Croake, Sarah

From: Sent: To: Subject:

Nicole.Rittenhouse@tklaw.com Wednesday, May 05,2004 7:20 PM Bloom, Michael J.; Zang, Theodore; Piatt, Jonathan W.; Rose, Christine; Croake, Sarah Maness Exhibits

As 1 told Michael earlier today, there are several exhibits on our list for Maness which were on our exhibit list, but were not objected to timely. Although we are not waiving our position that any objection now would be untimely, we would like to know before Maness's direct begins tomorrow which, if any, of these exhibits you plan to object to. Following is a list of the relevant exhibits: RX 31 18-31 30 RX 3261 -3272 RX 3280-3289 RX 2325 RX 295 RX 2887 RX 2208-2209 RX 3238-3240 RX 3245 RX 2822 RX 3252 RX 3134-3138

Also, the list I sent last night included footnote numbers because 1 had. not had a chance to match up the footnotes to exhibit numbers. Here is a list that has the exhibit numbers (there is no change in substance from last night's e-mail). RX 3238-40 RX 3245 RX 3248 RX 2822 RX 3250 RX 3252 RX 3133-3138 RX 31 58-31 63 RX 3 1 82-31 83 RX 3168-3171 RX 3260 CX 616 RX 13 RX 31 18-31 30 RX 3261 -3272 RX 10-11 RX 3280-3289 RX9 FX 2325 RX 295 RX 2887 RX 2208-2209 CX 1 155 CX 508 CX 625

Thanks,

Nicole L. Rittenhouse Thompson & Knight L.L.P. 1700 Pacific Avenue Suite 3300 Dallas, TX 75201 (214) 969-1 149 (21 4) 999-1 508 (desktop fax)

THlS ELECTRONIC MAIL MAY BE SUBJECT TO THE ATTORNEY-CLIENT PRIVILEGE OR THE ATTORNEY WORK PRODUCT PRIVILEGE OR OTHERWISE CONFIDENTIAL. ANY DISSEMINATION, COPYING OR USE OF THlS E-MAIL BY OR TO ANYONE OTHER THAN THE DESIGNATED AND INTENDED RECIPIENT(S) IS UNAUTHORIZED. IF YOU HAVE RECEIVED THIS MESSAGE IN ERROR, PLEASE DELETE IT FROM YOUR SYSTEM IMMEDIATELY.

Exhibit C

North Texas Specialty Physicians 5/6/2004 Vol. 8

Page 1892

FEDERAL TRADE COMMISSION

I N D

WITNESS: DIRECT

VAN WAGNER

MANES S 1 9 8 2

E X H I B I T S

N o n e

N o n e

E X ( P U B L I C RECORD)

CROSS REDIRECT RECROSS

1 8 9 7 1970

2 0 9 3

FOR I D I N EVID W I T H D m W

For The Record, Inc. - 301-870-8025

No* Texas Specialty Physicians 5/6/2004 Vol. 8

Page 1980

A Yes, sir.

MR. HUFFMAN: Your Honor, you'd asked

what the deposition exhibits were for

Dr. Van Wagner. That would be CX1194 through

CXll97.

JUDGE CHAPPELL: Thank you.

MR. HUFFMAX: That's all the redirect

I have, Your Honor.

JUDGE CHAPPELL: Any recross based on

redirect?

MR. ZANG: No, Your Honor.

JUDGE CHAPPELL: Thank you, ma'am.

You're excused.

(The witness stood aside.)

JUDGE CHAPPELL: Next witness?

MR. H U F F W : Yes, Your Honor, I'd

like to call Dr. Robert Naness to the stand.

Oh, I'm sorry. Before we do that, we

have an exhibit matter before we call him.

iTUDGE CHAPPELL: All right.

MR. KATZ: I just wanted to make it

clear for the record, Your Honor, in preparation

for Dr. Manessl testimony, there's some exhibits

that had not yet been admitted into evidence. We

provided a copy to Complaint counsel. They have

North Texas Specialty Physicians 5/6/2004 Vol. 8

Page 1981

had a chance to review them. They have no

objection to the list of exhibits I'm going to

list off here. I just want to make it clear that

we are offering them into evidence. My

understanding is there's no objection from

Complaint counsel, and we will be providing

originals to the court reporter.

JUDGE CHAPPELL: Okay, read the list.

MR. KATZ: These are a11 R X s . 3118

through 3130, 3261 through 3272, 2325, 295, 2887,

2208 and 2209, 3238 through 3240, 3245, 2822,

3252, 3134 through 3138.

JUDGE CHAPPELL: Any objection?

MR. BLOOM: Your Honor, counsel for

Respondent has represented to us that these

documents were contained on their exhibit list and

that we did not make any objection. I've not

verified that, I see no need. Based on that

understanding, we have no objection.

JUDGE CHAPPELL: The exhibits just

read into the record by Mr. Katz.are admitted.

(RX Exhibit Numbers 311'8 through 3130,

3261 through 3272, 2325, 295, 2887,

2208, 2209, 3238 through 3240, 3245,

2822, 3252, and 3134 through 3138 were

For The Record, Inc. - 301-870-8025

North Texas Specialty Physicians 5/6/2004 Vol. 8

Page 1982

admitted into evidence.)

MR. HUFFMAN: Your Honor, I'd like to

call Dr. Robert Maness to the stand.

JUDGE CHAPPELL: State your full name,

please.

THE WITNESS: Robert Stafford Maness.

JUDGE CHAPPELL: Where do you live?

Don't need street address.

THE WITNESS: College Station, Texas.

DR. ROBERT MANESS

was sworn and testified as follows:

DIRECT EXAMINATION

BY MR. H U F F M :

Q Dr. Maness, can you tell me what your

prlofession is, please?

A Yes, I'm a Ph-D. economist.

Q And where are you a P h . D . economist?

A I work for a firm called LECG. It's a

national firm, but I work here in Texas, in

College Station.

Q All right. Can you trace for me

briefly your educational background?

MR. HUFFMAN: And, Your Honor, I'm

going to tender into evidence his resume, but 1'11

do just a little bit of brief orientation

-- For The Record, Inc. - 301-870-8025

UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSlON

In the Matter of

NORTH TEXAS SPECIALITY PHYSICIANS,

a corporation.

Docket No. 9312

PROPOSED ORDER

Having considered Complaint Counsel's Memorandum in Supporf of its Motion to

Exclude Ex.hibit Rx 3 1 18-3 130 &om evidence,

IT IS HEREBY ORDERED that Complaint Counsel's motion to exclude exhibit Rx

3 1 18-3 130 fiom evidence is granted.

D. Michael Chappell Administrative Law Judge

Date: